April 2016

April 2016


Tax Treatment of Water Quality Measures for Farm Operators and Landowners

Water quality in Iowa has been in the spotlight for many months. In honor of Soil and Water Conservation Week, we are addressing a topic that comes up frequently: What is the tax treatment for various water quality measures rural landowners or farm operators can implement? Are there some measures that would be more advantageous than others, from a tax point of view? This article—not meant to provide in-depth treatment of this somewhat complex topic—provides a general overview of the tax implications of various water quality measures, specifically those targeting nitrogen reduction.

Using the Iowa State University Publication, Reducing Nutrient Loss: Science Shows What Works as a guide, we review common practices, in turn, for their tax consequences. Continue reading here.


When Tenants in Common Own the Farm

It’s a common situation that often leads to conflict. A father dies without a will and his three children inherit his farm through the rules of intestate succession. Or maybe an aunt dies with a will leaving a one-third share of her 80-acre pasture to her nephew and the remaining two-third’s share to her niece. In both cases, the parties inheriting the property are tenants in common.

Most Iowa landowners understand the basic rights of tenants in common. They each have an undivided interest in the whole property. Regardless of their respective ownership interests, they each have the right to possess the entire parcel. A tenant in common with exclusive possession of the entire parcel must pay rent to the other tenants in an amount reflecting the non-possessing tenants’ ownership shares. When tenants in common die, their respective shares are passed to their heirs in the same manner as their other property. Continue reading here.


Agreements to Terminate Iowa Farm Leases Must Be in Writing

Recently, the Iowa Legislature enacted new legislation to require that an agreement to terminate a farm lease be in writing. The Governor signed HF 2344 into law on April 13, 2016.

This simple change better aligns Iowa's farm lease termination statute with legislative intent and court-declared policy and may prevent unnecessary court battles. It has long been the case in Iowa that, absent an agreement to terminate a farm lease, a farm tenant or a landlord must abide by strict statutory notice procedures to avoid an automatic renewal of the lease. Under Iowa Code § 562.2, “a farm tenancy is continued beyond the agreed term for the following crop year upon the same terms and conditions as the original lease unless written termination notice is served upon either party…” Iowa Code § 562.7 requires this written notice to be (1) served by certified mail before September 1, (2) personally served on or before September 1 in the same manner as original notice of a lawsuit is served, or (3) delivered to the other party with an acceptance of service signed by the person receiving the notice on or before September 1. Continue reading here.

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CALT does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. CALT's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.

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